Survey: More employers to cancel employee health plans in next five years, others may greatly raise deductibles

About 7 percent of New Jersey employers said they are likely or very likely to terminate their health plans within the next five years, when their workers can buy their own coverage on the Marketplace, according to a new survey by the Mercer employee benefits consulting firm.

And for those employers keeping their plans, the deductibles individuals pay could rise dramatically.

Rich Fuerstenberg, a senior partner of Mercer based in Princeton, said nationally the median deductible is $1,500 for an individual employee, but only $350 in New Jersey.

"We think the high deductible trend that is sweeping most of the country, especially among small employers, has not quite hit New Jersey yet, but is likely to come," he said.

Nationally, 6 percent of large employers and 31 percent of small employers said they are likely or very likely to terminate their plans within five years.

Cost may be the primary reason for the move, the survey indicates.

The cost of employer-sponsored health plans rose 7 percent in New Jersey in 2013 to an average of $13,120 per employee,

For 2014, New Jersey employers estimated that without changing their current health plan, their costs would rise by 8.4 percent. However, they expect to hold that to about 5 percent by changing the plan design and/or shopping around for a new insurer or health plan vendor.

For 2014, employers and their workers can buy health coverage on the new Marketplace created by the Affordable Care Act. Enrollment is underway but is hampered by glitches plaguing the healthcare.gov website.

A factor that helped control cost increase in 2013, particularly for the larger employer, is the emphasis on health and wellness.

"They are not just promoting wellness, but in many cases employers are putting in incentives or penalties that are results-based," Fuerstenberg said, with fairly sizable financial incentives to join a smoking cessation or weight-loss program.

"There is a lot of money on the table. And of the employers that are putting those programs in place and measuring their effectiveness, 90 percent think they are working. So we think you are going to see more of them."

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Beth Fitzgerald

Beth Fitzgerald reports on health care, small business and higher education. She joined NJBIZ in 2008 after a 34-year career at the Star-Ledger and has been reporting on business in New Jersey since 1978. Her email is beth@njbiz.com and she is @bethfitzgerald8 on Twitter.